Analyst Note
| Kevin Brown |Vaccinations across the country have yet to hit a level that allows hotels to return to profitability, so no-moat Pebblebrook Hotel Trust saw another period of negative earnings in the first quarter. The decline was in line with our expectations, leading us to reaffirm our $26 fair value estimate. Occupancy remained low at 18.8% in the first quarter, well below the 56.7% the company recorded in the first quarter of 2020 and 75.4% in the first quarter of 2019. Rate growth held up well despite the low occupancy level, only falling 3.8% year over year and 4.6% compared with the 2019 level. Still, the large occupancy decline led to a 68.0% year-over-year decline in revenue per available room, which is in line with our estimate of a 69.3% decline. Pebblebrook's expense reductions were also in line with our expectations, at 53.9% compared with our estimate of 54.8%. As a result, the company saw a hotel EBITDA loss of $15.1 million and produced an adjusted funds from operations loss of $0.42 per share in the first quarter, in line with our estimate of a $0.45 loss.